Nokia reports Q2 results reflecting difficult market conditions

Nokia announced a sharp fall in sales leading in Q112, resulting in a loss of €1.4 billion (US$1.73 billion) for the period.

During the three months (April to June) volumes of its Windows Phone-powered Lumia range increased to four million units. However, it also noted that on a sequential basis, the average selling price (ASP) of the Lumia range fell to €186 from €220.

With the company having shipped 10.2 million smartphones during the quarter, this means that Symbian and MeeGo devices still make up more than 60 per cent of these sales.

Sales for the quarter amounted to €7.5 billion, down 19 per cent from €9.3 billion. On an operating level, the loss amounted to €826 million, compared with a loss of €487 million in Q2 2011.

In its Smart Devices unit, net sales fell by 34 per cent to €1.5 billion, as volumes fell by 39 per cent to 10.2 million units. More encouragingly, average selling prices increased both year-on-year (up seven per cent) and quarter-on-quarter (up six per cent) to €151, aided by stabilisation in the Symbian portfolio.

Stephen Elop, Nokia CEO noted that Nokia’s mass-market Mobile Phones unit “demonstrated stability,” with a two per cent year-on-year increase in shipment volumes to 73.5 million. However, sales for this business declined by 11 per cent year-on-year to €2.3 billion, with average selling prices dropping by 14 per cent (six per cent over the prior quarter) to €31.

It was noted that volumes of its higher-priced feature phones were impacted by “competition from more affordable smartphones and from competitors with broader portfolios of feature phones with more smartphone-like experiences, such as full touch devices.”

As a whole, the Devices & Services business saw an operating loss of €474 million, compared with a prior year loss of €216 million, on revenue of €4 billion, down from €5.5 billion. Total volumes fell by five per cent to 83.7 million units.

Elop said that for the Location & Commerce division, “our business with auto-industry customers continued to grow, and we made good progress establishing our location-based platform with businesses like Yahoo, Flickr and Bing”. This unit reported an operating loss of €95 million on sales of €283 million, up four per cent.

Nokia Siemens Networks (NSN) saw an operating loss of €227 million for the quarter on sales of €3.3 billion, down from €3.6 billion a year earlier. Elop said that this business “returned to underlying operating profitability through strong execution of its focused strategy.”

Nokia said that on a year-on-year basis, NSN experienced a decline in sales of infrastructure equipment as well as slower operator investment environments in certain markets, including Europe. This was partially offset by a slight increase in services sales.